Ulster ups ante with lowest mortgage rate in the market


Competition in the mortgage market has stepped up with Ulster Bank introducing new rates that undercut its rivals.

The lender reduced its five-year fixed rate to 2.2pc for those borrowing more than €300,000.

This is the lowest mortgage rate in the market. Experts said rates as low as that come close to those being offered on the continent, where mortgages tend to be much cheaper.

The bank is also offering a new 10-year rate which is as low as 2.95pc for first-time buyers, movers and switchers. This will be a market-leading rate.

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And Ulster Bank is extending its offer of €1,500 towards legal fees until the end of March. The bank does not offer cash-back.

The lower fixed rates vary depending on how big a deposit new borrowers have, or how much equity in their existing home movers and switchers have amassed.

People benefiting from an exemption from Central Bank lending rules will have to pay slightly higher rates.

What the bank calls its high-value five-year fixed rate has been reduced from 2.5pc to 2.2pc. This will be the lowest mortgage rate in the market. But lenders can only borrow 80pc of the value of the property.

The new 10-year rate will be priced between 2.95pc and 3.15pc, depending on how much people are borrowing relative to the value of the property.

Ulster Bank now joins Haven, KBC Bank, Bank of Ireland and AIB in offering customers the choice of a rate fixed over 10 years.

Fixed rates in this country are now lower than most variable rates, which is considered unusual in comparison to other countries, according to Daragh Cassidy of price comparison site Bonkers.ie.

A borrower with an existing 10-year rate of 3.3pc, with a €250,000 mortgage, would save €5,500 over the 10 years by opting for Ulster Bank’s new 2.95pc rate. However, moving off a fixed rate incurs breakage fees.

Ulster Bank’s head of home buying and ownership, Lorraine Costelloe, said the bank was introducing better fixed rates as customers were looking for greater repayment certainty for longer.

Some 70pc of new mortgage contracts across all lenders are now fixed deals, according to Central Bank figures.

Ms Costelloe added that the bank was also launching an online agreement-in-principle tool through its website.

Mr Cassidy of Bonkers.ie said: «The fact that Ulster Bank is undercutting the market yet again shows that competition in the mortgage market is growing, albeit slowly.»

He said the question now is whether any lenders will start offering even longer-term fixed rates of 12 or even 15 years like in the rest of Europe.

Meanwhile, a recent entrant into the mortgage market, ICS Mortgages, has reduced its three and five-year rates for first-time buyers, movers and switchers.

The three-year fixed rates range from 2.45pc to 2.6pc, with five-year fixed rates now ranging from 2.4pc to 2.6pc. The rates depend on the size of the loan relative to the property’s value.

Customers can also overpay their mortgage by up to 20pc on a fixed rate without penalty, which can be either a lump sum or regular overpayments. This gives customers flexibility and could lead to the mortgage being paid off earlier.

ICS is the trading name of loan provider Dilosk, which bought ICS Mortgages from Bank of Ireland in 2014.

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